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Strategic Sourcing & Procurement Flashcards

7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. A procurement manager is evaluating global sourcing options. Which factor is MOST likely to erode the cost savings of offshore sourcing?

    Answer: Extended lead times and higher inventory carrying costs

    Extended lead times from offshore suppliers increase inventory carrying costs, which can significantly erode unit cost savings.

  2. In the context of strategic sourcing, 'category management' refers to:

    Answer: Grouping related spend categories and developing unified sourcing strategies for each

    Category management groups similar spend areas to develop coordinated sourcing strategies that leverage combined volume and expertise.

  3. What distinguishes a 'strategic alliance' from a standard supplier contract?

    Answer: Strategic alliances involve shared goals, joint investment, and mutual dependency beyond a simple transaction

    Strategic alliances are characterized by shared objectives, joint investments, and interdependency that go far beyond a standard transactional supplier agreement.

  4. Which metric BEST measures a supplier's delivery performance over time?

    Answer: On-time delivery (OTD) rate

    On-time delivery (OTD) rate directly measures what percentage of deliveries are received on the agreed delivery date.

  5. A procurement team is implementing 'demand management' as part of their strategic sourcing initiative. This PRIMARILY involves:

    Answer: Challenging and reducing internal requisitions before they become purchase orders

    Demand management focuses on scrutinizing and reducing internal demand before purchasing, addressing the root cause of spend.

  6. Which of the following BEST defines 'maverick spending' in a procurement context?

    Answer: Purchases made outside approved contracts and procurement processes

    Maverick spending occurs when employees bypass established procurement contracts and processes, undermining negotiated savings and compliance.

  7. In strategic sourcing, a 'make-or-buy' analysis is MOST relevant when:

    Answer: An organization is deciding whether to produce a component internally or outsource it

    Make-or-buy analysis evaluates whether producing internally or outsourcing better serves the organization's cost, quality, and strategic objectives.